It's crunch time for Brexit talks......>

GILT SUMMARY: It's crunch time for Brexit talks this week, with UK PM Theresa

May already rejecting the EU's draft deal over conflicting attempts to resolve

the Irish border issue. 

- Gilts have rallied over the past hour and the curve has flattened very

slightly.

- The benchmark 2-year gilt trades at 0.803% down from a high of 0.827% and the

10-year trades at 1.601% down from 1.621%.

- The 2s10s spread has edged down to 78.9bps from 79.5bps.

- The Dec 18 Gilt future has traded up to 120.78bps from a low of 120.59bps.

- The short sterling futures strip is up 3.0-4.0 ticks. Short sterling option

flow has been relatively light this morning.

- Despite the uncertainty surrounding Brexit and the growing risk of the UK

leaving the EU without a comprehensive trade deal agreed, the market is still

positioned for at least one policy rate hike.

- Coming up this week on the data front are labour market data published

tomorrow and inflation on Wednesday.